How to stop paying high fees on Coinbase ?
If you have used Coinbase a few times, you have seen that each Bitcoin (or Ether or even Litecoin) purchase that you made there was expensive in fees. Let’s see how to reduce those fees to nearly nothing (we’ll use Bitcoin in our examples but this is also working for Ether and Litecoin).
I/ Classic purchase via credit card
The classic workflow on Coinbase to buy Bitcoin is to use your credit card.
For instance, you’ll buy 0.1 BTC with it. Since you’ve used your credit card, Coinbase will also charge you 3.99% for that. Are you seeing now how expensive it can become ? If 0.1 BTC costs you 500$, you’ll need to add 19.95$ in fees for a total of 519.95$. Unfortunately, when you begin to use Coinbase, you think that this is the only way. Besides, many experimented users continue to use this way to get some Bitcoin because they don’t know that they can pay less.
II/ SEPA purchase (bank transfer)
When you begin to repeatedly pay those high fees, you search for a most efficient way to get some Bitcoin. Then, at this point, you should find a better solution named bank transfer.
By using this method, you directly send money from your bank account to your USD Coinbase account (or other currency depending on your account). This operation is painless, fast and free. If everything is well set, by sending your wire early in the morning on a business day, you could receive your money at noon the same day. Otherwise, you’ll wait one or in the worst case a few days to receive it (it’s just a classic bank wire). Once your money is in your Coinbase account, you will be able to buy some Bitcoin. In this case, Coinbase will charge you 1.49% (no longer 3.99%). Then, for 0.1 BTC at 500$, you will pay a total of 507.45$. We’ve won 12.5$ compared to the first solution (credit card).
III/ GDAX purchase
At last, here it is, the best way to minimize your fees when buying Bitcoin on Coinbase.
I present you GDAX (Global Digital Asset Exchange). It is an exchange directly related to Coinbase that owns it. On there, you are able to buy and sell Bitcoin, Ether and Litecoin with your local currency. The unknown feature by many people is that if you are logged in on your Coinbase account and you go to GDAX website, by clicking on “Create Account” button there, you will be automatically logged in on GDAX with your Coinbase credentials. Then, you will be allowed to transfer money from your USD Coinbase account to GDAX for free (we consider that you started by doing a bank wire to put some of your money for free from your bank account to your Coinbase account). Once your money is ready to be used on GDAX, you will be able to use the exchange to buy Bitcoin at market price (to get it instantly) or with limit orders (to get it cheaper if the price drops). Your Bitcoin purchased, you will need to transfer it back to your Coinbase account for free. In those operations, everything is free except for the purchase on GDAX. It will cost you 0.25%. Therefore, for 0.1 BTC at 500$, you will pay a total of 501.25$. We’ve won 6.2$ compared to the second solution (SEPA with a purchase directly on Coinbase) and 18.7$ compared to the first solution (credit card). Fantastic !
In conclusion, now you know and you are aware. Don’t pay anymore huge fees to buy Bitcoin, Ether or Litecoin on Coinbase. Use bank transfers and GDAX to optimize your investments. If you liked this great tip, don’t hesitate to share it with your friends and family.
Sources (depending on your country, rates and methods described in this article are likely to change):